Are financial concerns holding SMEs back?

Despite the onset of a recovery from the depths of a recession, it appears that many SMEs are still concerned about their financial plight.


While it would appear that the state of the economy is on the up, research from accountancy firm Baker Tilly showed that 96% of SMEs questioned are “content” with their current situation.


If this is the case it would suggest that many companies still have concerns about investing and accessing finance.


Chancellor George Osborne recently challenged UK businesses to double exports to £1 trillion by 2020, but that would seem far-fetched if businesses are not prepared to invest.


The Baker Tilly Your Business Outlook 2014 survey looked at 750 small and medium sized enterprises and found that they are not confident about the economic recovery just yet.


Neil Sevitt, partner at Baker Tilly, said: “It is a real concern that, if SMEs do not take a long-term view and ignore opportunities for investment and expansion, economic recovery will remain hesitant and uneven. Businesses need to take more courageous and strategic decisions.”


Some SMEs are looking to alternative sources of finance but 84% of businesses questioned were not willing to take on more debt.


Striving for growth without risking instability


Whether this is due to an unpredictable economic climate, fears of liquidation or corporate restructuring is hard to identify, but a lack of investment could halt economic growth.


Of those questioned, only 23% said they would consider alternative means of funding while only 18% of businesses said they want to take on new staff.


One fifth of companies planned to increase their capital expenditure, while 23% planned to develop their sales and marketing strategies.


Either way it would seem apparent that the plans from the government to enhance exports are a bit early in the making.


Businesses seem keen to protect their own futures prior to looking at expansion, which is having an effect on the levels of money they are prepared to invest.


If SMEs really are meant to be the driving force behind economic recovery, maybe it is time for them to consider the possibilities of restructuring their businesses to make them more efficient.


Only then could investment into exportation and expansion be considered a viable possibility.


By Phil Smith


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